* In a double boiler, melt caramels in water. Dip half of each pretzel into the hot caramel. Place on a greased sheet of foil to cool.

* In a microwave, melt chocolate and shortening; stir until smooth. Dip caramel-coated end of pretzels into the chocolate, allowing excess to drip off; sprinkle with nuts. Return to foil to cool. Yield: about 2-1/2 dozen.